Private banks target family offices

By Sudip Kar-Gupta

GENEVA (Reuters) - Private bankers see little threat from "family office" practices -- units set up to typically manage money for one wealthy family or a small group of them -- and instead regard them as opportunities to win more business.

"Family offices are very close to our heart," Reinhard Krafft, head of private banking at German bank Sal Oppenheim, told the Reuters Wealth Management Summit.

"It's about taking care of family finances and being as neutral as possible about selecting the right products and right managers," he added.

The idea of a family office goes back to the 19th century when U.S. billionaire John D. Rockefeller in the 1890s employed Frederick Gates to handle many of his personal investments, family-wealth issues and philanthropy.

Over the past century, family offices have become more diversified, handling tasks ranging from financial investments and estate planning to domestic issues such as hiring maids, paying school fees and organizing family vacations.

Sal Oppenheim's Krafft said private bankers have to take into account scenarios where for instance a rich German might retire to Marbella, have heirs living in Paris or Milan, and need a private bank to cater for various bits of family business in different countries.

"We have to prove we can give independent advice. If we don't, the client might leave us. Some families are now cross-border so we have to extend reach of the family office into Switzerland," he told the summit taking place at Reuters offices in Geneva.

Paolo Molesini, head of private banking at Italian bank Intesa Sanpaolo (ISP.MI: Quote, Profile, Research, Stock Buzz), said family offices might end up being customers of private banks.  Continued...